Seminar 7

Statutory Obligations of Employers

Part II

Central Provident Fund Act
Started in 1955. Aim?
Can withdraw cash from CPF only at age of 55, subject to
minimum sum which can only be withdrawn from 65.
But note: there are exceptions:
For instance, in some situations (such as ) you can
withdraw cash from CPF even before age of 55.
Also there are many schemes allowing money in the CPF to
be used even before retirement for various matters such as:
- home ownership,
- insurance,
- approved investments &
- education at local institutions.

Details relating to CPF
Generally payable in respect of anyone employed in
Singapore.
However, there are many exceptions such as:
Foreigners who are not permanent residents and instead hold
work permits/employment passes/S passes,
Domestic workers if not more than 14 hours in a week.
A/O/N level students who work during their gazetted school
holidays,
University/Poly/ITE students who do industrial attachments.


Details relating to CPF
Minimum amount of salary which attracts CPF is: $___per month.
Actual rate varies depending on factors such as
- Age,
- Amount of Income per month,
- Citizenship/PR status.


Details relating to CPF
For those earning more than $750 and are less
than 50 years of age the current rate is 36%
(though employer can recover 20% back from the
employee).
Example:
(a) if your contract states that your monthly salary
is $2000, how much would go into your CPF
account monthly?
(b) How much can the employer take out of the
employees salary to contribute to CPF?




Details relating to CPF
However note: there is a limit to the
amount of contribution.
In order to determine this limit, need
to distinguish between:
(a)Ordinary Wages (OW) &
(b)Additional Wages (AW).
Definitions of OW and AW.

Details relating to CPF
OW Limit per month: $5000
OW Limit per year: $5000 x 12 = $___
AW Limit no separate limit, but there is a combined
limit together with OW:
OW + AW = $85,000 per year.
So example: assuming your December bonus is
$30,000 how much of it would attract CPF assuming
you salary per month is:
(a) $4500
(b) $7000
(c) $3000


Details relating to CPF
CPF is payable in respect of remuneration in money
which has been interpreted by cases to mean reward for
services rendered eg: salary/bonus.

Would the following attract CPF:
(a) Food allowances?
(b) Food?
(c) Reimbursement for work-related taxi-fare?
(d) Tips (given by third parties)?
(e) Work Injury Compensation received for injuries at
work?

Details relating to CPF
Effect of Failure to pay.
What if you are self-
employed?

Skills Development Levy Act
Idea behind Skills Development Levy (www.wda.gov.sg).
Employer has to pay skills development levy in respect of all
employees except some such as domestic workers.
The first $4500 of the employees salary would attract the
levy.
The levy is at a rate of 0.25% or $2 which ever is greater.
Example: if your salary is $1000, what is the levy amount?
What are the consequences of not paying the levy?
Note: no link between amount paid and amount that can be
used by employer or which employees can be sent for
subsidised training.
Retirement and Re-Employment Act
Current Retirement Age 62.
Cannot be dismissed before that on the grounds of
age.
So can an elderly person be dismissed on the
grounds of poor performance?
If Retirement Age Act has been breached employer
would be committing an offence and employee may
be reinstated in the job or get compensation.
There are exceptions such as: cabin crew/police
officers/Singapore Armed forces.
Does this statute cover non-hiring?

Re-Employment
At the age of 62 (or the contractual age of retirement if it is
higher) employer may have to offer re-employment
provided the employee has satisfactory work performance
and is medically fit.
If criteria is not satisfied, employer does not have to re-
employ or offer compensation.
If criteria is satisfied, employer has two choices:
The first is to offer re-employment (up to the age of 65); but
terms and conditions can be different.
The second is to offer compensation but provided there is
no suitable vacancy.
Disputes can resolved at MOM through mediation and if that
fails, an appeal can be launched with the Minister.



Discrimination - Hiring
Article 12(2) of the Constitution provides there shall be no
discrimination against citizens of Singapore on the grounds
only of religion, race, descent or place of birth in the
appointment to any office or employment under a public
authority.
Who cannot be discriminated?
What types of discrimination are missing?
Further, these provisions are likely to apply only to actions of
the government not to private individuals/businesses.
Private individuals/businesses are unlikely to be under any
such legal duty.

Discrimination
Though there is little legal protection, note the
presence of the tripartite initiatives.-
What is the effect if guidelines are breached?

Source: The Straits Times
TAFEP
Eg: Can a job advertisement of a transport company
state: looking for males who can carry heavy loads?
Eg: Can a job advertisement of a cosmetic company
state: need female counter-sales staff?
Eg: Can a job advertisement of a company state: only
Singapore citizens/permanent residents need apply?
Eg: Can the following questions be asked during an
interview: are you married, do you have children, do
you intend to have children?
Discrimination - Firing
Article 12(2) talks about non-hiring. What about firing? Does
article 12(2) cover it?

However note: section 14(2) of the Employment Act provides
that if an employee feels that he has been dismissed without
just cause or reason, he may appeal to the Minister within 1
month of the dismissal and the Minister can reinstate him or
order compensation.
The term dismissal includes termination by notice or salary in
lieu of notice.
Thus an employee who is covered by the Employment Act, if
his employment has been terminated on discriminatory
grounds, he may appeal to the Minister pursuant to section
14(2).
(a) Is he
an
employee
if so, of
whom?

(b)
Assuming
he is an
employee
, is he
covered
by EA?

(c) If so,
what can
he do and
what are
his
chances
of
success?
Summary
Subject to some exceptions, employers have to
contribute to CPF. Failure to do so is an offence.
Employers have also to contribute to the Skills
Development Levy in respect of employees who
meet certain criteria.
Employers should not terminate the services of a
person solely on the grounds of age. To do so would
be an offence.
In Singapore, the rules on discrimination, in relation
to hiring, are aimed at the actions of the State.
Private employers are not under any legal obligation
not to discriminate as such. In terms of firing, the
Employment Act provides some protection.
Reading
Basic Text: 4.82-4.89, 4.93-4.94, 4.96-4.98,
4.100-4.102, 4.104-4.106, 4.109, 4.221-4.232,
4.236-4.237, 4.239-4.242, 4.244, 4.246.
Singapore case referred to in the tutorial and
available in lexis.com.